2 FTSE 100 growth stocks with unshakeable momentum

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Standard Chartered Bank

This year has been highly profitable for a number of FTSE 100 stocks. Share prices have generally risen and the outlooks for a number of companies are very bright. While this can mean that valuations have moved to unattractive levels in some cases, there are still a number of stocks which offer potential upside. Here are two prime examples which could be worth a closer look.

Strong turnaround

Rising by 15% since the start of the year has been Standard Chartered(LSE: STAN). It released an impressive first quarter update on Wednesday which showed that its turnaround plan is progressing well. Income of $3.6bn was 8% up versus last year, while expenses of $2.4bn were well-controlled and consistent with the run-rate seen in 2016 as a whole.

Encouragingly, the bank's loan impairment of $198m was particularly low. It was down 58% year-on-year, while profit before tax growth of 94% indicates that the company is moving in the right direction. Further evidence of this can be seen in the rise in net loans and advances to customers, which were up 5% from the end of the year. A common equity tier 1 (CET1) ratio of 13.8% was 0.2% up on 2016's closing level, which indicates that Standard Chartered is becoming more resilient and sustainable.

Looking ahead, the bank is expected to increase its bottom line over the next two years. By 2018, it is forecast to be around 10x higher than it was in 2016. This puts the company on a price-to-earnings growth (PEG) ratio of only 0.2, which suggests that more capital growth could be on the horizon. Certainly, its turnaround is not yet complete. But with the potential for further progress, its momentum is strong.

Low valuation

Despite rising by over 5% since the start of the year, Prudential(LSE: PRU) trades on a relatively low valuation. For example, it has a price-to-earnings (P/E) ratio of just 12.2. Given it is forecast to record a rise in earnings of 7% this year and 8% next year, this appears difficult to justify. Furthermore, its exposure to the Asian economy and the rising wealth levels in the region means that the scope for stronger rates of growth beyond next year is high.

As well as growth and value potential, Prudential also seems to offer impressive dividend prospects. While its shares currently yield just 2.7%, the company pays out just a third of profit as a dividend. Clearly, some capital must be reinvested in order to develop its product offering in Asia and other fast-growing regions, but it seems unlikely that it will require two-thirds of profit each year in the long run.

As such, there is obvious potential for a higher dividend. This could improve the stock's overall investment appeal at a time when inflation is moving higher. Therefore, now could be the perfect time to buy it for the long run.

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Peter Stephens owns shares of Prudential and Standard Chartered. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.